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Expert answers to 9 common homebuyer questions about closing costs

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Photos: James Bombales

Buying a home is a major investment and the largest financial transaction most people will make in their lives. In addition to the purchase price, interest rates, and condo fees, homebuyers need to be aware of their closing costs. Expenses such as legal fees, land transfer taxes and insurance can add up, leading many homebuyers to underestimate the amount of cash on hand that they’ll need when it comes time to close on the transaction.

To learn more about closing costs and what you should be prepared for, Livabl turned to Ara Mamourian, broker and partner at thespringteam.ca, and David Duncan, vice president, real estate secured lending, at TD Canada Trust to answer our questions.



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1. How much should homebuyers put aside for closing costs?

“As you save for your home, it’s a good idea to build in a 3 to 5 percent of the purchase price as a buffer for closing costs where possible,” says Duncan. “This way, you’ll have funds available if costs end up being higher than anticipated.”

If your final closing costs end up being less than what you put aside. you can put that money towards your mortgage or keep it as an emergency fund to help cover repairs or future renovation projects.

2. When are closing costs paid in a real estate transaction?

“Closing costs are typically paid at the closing of a real estate transaction,” says Duncan. “The closing is when the title of the property is transferred from the seller to the buyer, and the buyer officially takes possession of their new home.”



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3. What are some common closing costs that people should save for?

“In addition to ongoing costs like mortgage payments, property taxes, maintenance and utilities, it’s important to understand all upfront costs over and above your down payment,” explains Duncan. “It’s a good idea to build in a little extra, just in case anything unexpected arises during closing or when you take possession of your new home.”

Examples of common closing costs include property assessments, property surveys, home inspection fees, legal fees, title insurance and moving fees. However, in most cases the land transfer tax amounts to the lion’s share of costs according to Mamourian. “If you’re a first-time buyer, you are eligible for a rebate of the municipal portion of up to $8,475 then legal fees would come in at around $1,800.”

Homebuyers should also be aware of any pre-payments by the seller that may need to be reimbursed. “Sometimes homeowners pay for all their property taxes up front for the year so if you move in half way through the year you’d have to reimburse the seller for that amount,” says Mamourian.



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4. What are some unexpected costs that homebuyers could face?

Unexpected or hidden costs are always a concern for new homeowners so it’s important to plan ahead and build a buffer into your budget. “As you get closer to buying a home, consider taking your monthly mortgage payments for a test-drive by making an automatic transfer of that amount into a TFSA or other high-interest savings account for a few months,” suggests Duncan. “This two-fold approach allows you to see how comfortably you can pay off the monthly mortgage and save extra money for unexpected costs that could arise, while also helping you save for a larger down payment.”

In rare instances a special assessment may be required in a condominium when a major repair is needed that surpasses the condo’s collective reserve fund. “Special assessments only happen if something has either gone wrong or if the reserve fund isn’t able to handle a capital expense that the board and residents approve,” says Mamourian. “If this comes into play at closing, it’s not a surprise and the buyer signs up for it.”

When it comes to homeownership, it’s a good idea to prepare for unexpected repairs or maintenance items. “Don’t ever expect to buy a house and have zero expenses,” says Mamourian. “That’s the thing about houses versus condos — most people have this misconception that condo fees are just wasted money but when in reality it’s just a fixed, predictable maintenance cost whereas in a house that annual cost is variable.”

5. Can homebuyers roll their closing costs into the mortgage loan?

“The only closing cost that can be rolled into a mortgage is your CMHC insurance premium,” says Mamourian. “CMHC premiums are payable only by those who are putting down less than 20 percent of the purchase price in cash as a down payment.”

“Homebuyers can always consider reducing their down payment to help cover closing costs however, they’ll end up with a larger mortgage,” adds Duncan.



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6. Do closing costs differ by location?

As mentioned above, land transfer taxes can take up a large portion of your total closing costs but not all land transfer taxes are the same. They can vary significantly by province and municipality. “The City of Toronto has its own land transfer tax on top of the provincial one so buying in Toronto is more expensive not only with the price of properties but also with closing costs,” says Mamourian.

7. Can homebuyers negotiate with sellers to pay the closing costs?

Homebuyers can always try to negotiate on closing costs, but it depends on the market. “In a seller’s market, you can’t be making demands like this,” says Mamourian. “In a buyer’s market, it’s open season, but rather than asking to pay closing costs like you see on TV, it’s usually just built into the offer price and still paid by the buyer.”



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8. What are some tips for how homebuyers can potentially reduce their closing costs?

“The total cost associated with items you’ll need during closing can range, depending on location and who you work with to do the close,” says Duncan. “For example, someone moving within the same province or city should pay less in associated moving fees compared to someone who is moving across the country. The associated legal costs may also vary depending on who you work with and what they charge for closing the transaction so it’s a good idea to contact different firms and ask for quotes.”

At the end of the day, when it comes to closing costs, the most important step is to plan ahead and build a buffer into your total budget.



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9. Is there anything else that homebuyers should be aware of when purchasing a home?

From closing costs and land transfer fees to property taxes and everyday maintenance costs, the price of homeownership is much more than your down payment and monthly mortgage payments.

“Calculate how much you spend each month on everything — rent, groceries, insurance, loans, taxes, entertainment, etc. — to determine what you can comfortably afford altogether and take advantage of helpful tools like TD’s Mortgage Affordability Calculator,” says Duncan. “From there, you can work with a financial advisor to develop a plan that will allow you to save for a down payment, ensure you have money put aside for closing costs and unexpected expenses that may arise, and be able to live the lifestyle you desire in your new home.”

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CFL: Argonauts counting on quarterback Arbuckle to see them past Ticats in feisty rematch

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The Toronto Argonauts went back to winning ways after suffering a defeat in Winnipeg by claiming victory over the Blue Bombers in their Toronto home opener.

This was off the back of a defeat by the Hamilton Tiger-Cats on Labor Day and with a rematch in view, the Argonauts are looking for an equally impressive repeat performance during their Friday rematch.

Ryan Dinwiddie, head coach of the Toronto Argonauts and his coaching staff did a tremendous job in making all the necessary adjustments in their tactics following the team’s defeat in the Peg. The task facing the Argonauts this week is quite similar.

With the CFL back in action, just like playing at online slots Canada, punters can ride their luck by betting on the Argos to come out victorious during this rematch.

However, just like how Winnipeg dominated on its home turf, the Ticats were also the better team at Tim Hortons Field. But when the Argos got ready for the Bombers at BMO, Dinwiddie made the vital switch at quarterback by starting Nick Arbuckle, who threw for 300 yards, one touchdown and dashed towards a major in his debut at quarterback.

Dinwiddie eventually replaced Arbuckle with McLeod Bethel-Thompson in the Hammer, but only when the Argos winning the game was no longer in doubt.

In Friday’s rematch, the Argonauts will field Arbuckle in the starting line up under centre and hoping for a repeat performance, said Dinwiddie in an interview. He noted that his team don’t intend to make Arbuckle the scapegoat during the game.

The front seven of the Hamilton Tiger-Cats dominated the game against the Argos and even when they had just five players in the box, it was extremely difficult for the Argos to take control of the line of scrimmage.

They stand a chance of redeeming themselves during their rematch, the Toronto Argonauts must take control of the line or at the very least not allow the Ticats to dominate them on the field of play.

The Argos completed touchdowns in all three phases during their Monday game, but they would need to be a lot better offensively against the Ticats.

“We weren’t very good up front,” said Dinwiddie. “I don’t care who was back there (at QB). We didn’t have a chance to win that football game based on our production.”

When up against a very organized Bombers defence—which lost six points to Hamilton in their season opener and then seven points to the Argos in game 2—the Argos were very impressive in their transitions, running and throwing the ball well and eventually being able to dictate the tempo of the game by controlling the time of possession.

The final scoreline of 30-22 score heavily flattered the Bombers, who got a defensive score following a sack and strip. Dinwiddie has taken full responsibility for his team’s apparent lack of composure during the first loss and is counting on his team to turn things around and be more composed.

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Canadian Leylah Fernandez through to the semi-finals of the U.S. Open after another major victory

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Canadian tennis player Leylah Fernandez has stunned the world of tennis again after recording an impressive win over fifth-ranked superstar Elina Svitolina on Tuesday, to progress to the semifinal of the U.S. Open.

Fernadez who only just turned 19 on the 6th of September, is now one of the youngest female tennis players to reach the U.S. Open semifinal since 2005 when Maria Sharapova achieved the feat at the age of 18. Emma Raducanu, the 18-year-old British tennis player also reached the semifinals on Wednesday.

Since eliminating third-ranked Naomi Osaka in the previous game, Fernandez, who is of Latino descent—with an Ecuadorian father and a Filipina-Canadian mother—has greatly captured the heart of the audience in New York.  

Also, her latest victory has earned the title of being the youngest player ever to eliminate two WTA Top-5 players at a major tournament, since 1999 when 17-year-old Serena Williams achieved this at the U.S. Open. Also, Montreal’s Félix Auger-Aliassime equally progressed to the U.S. Open semifinals on Tuesday.

When quizzed about the incredible success of Canadian players during this year’s tournament, Fernandez attributed it to the “maple syrup”.

Still hoping to hit jackpot by claiming her first major, Fernandez’s journey so far has not only been a thing of pride for Canadians but all members of the Ecuadorian and Filipino diaspora community across the country.

“This is particularly a golden moment,” said Romeo Candido, a filmmaker, writer and musician in a report. “To have someone who is repping both the Filipino and Canadian identity, it’s giving us a whole new level of feeling: Through association it makes us feel victorious ourselves.”

Ranked 73rd in the world, the current U.S. Open is only just the seventh major tournament of Fernandez’s career. Midway through the first set, she broke Svitolina and went on to win four out of 10 breakpoints in a game that lasted for two hours and 24-minutes.

“I was only thinking of trusting myself, trusting my game. After every point, win or lose, I would always tell myself, ‘Trust my game. Go for my shots. Just see where the ball goes,’” said Fernandez.

“I obviously have no idea what I’m feeling right now,” she continued. “I was so nervous. I was trying to do what my coach told me to do.”

Fernandez’s father doubles as her coach but was unable to be in New York, however, he stayed back at home and offered her daily tips during their frequent phone conversations. Her father’s coaching, alongside the roar of support she received from the crowd in the Arthur Ashe Stadium, who clapped and cheered wildly every time Fernandez claimed a point was quite instrumental to her victory.

“Thanks to you, I was able to push through today,” she told the supportive crowd after her victory.

In the next round, she would need another impressive performance to swing past No. 2 seed Aryna Sabalenka of Belarus, a Wimbledon semifinalist in July and who defeated Barbora Krejcikova, the French Open champion in two straight sets, 6-1, 6-4.

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What Is A Housing Bubble? And Are We In One?

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What is a housing bubble? You’ve undoubtedly heard the term, but what does it actually mean, and is Canada experiencing one? Whether you already own a home, are considering buying one in the near future, or you’re waiting for the right time to sell, here we answer what is a housing bubble, what causes it, and how it may affect you.

What is a Housing Bubble?

A housing bubble happens when the price of homes rises quickly, at an unsustainable rate. Typically, a price-growth rate that’s in the high single-digits is considered to be healthy and sustainable. Under healthy conditions, homeowners continue to earn equity over time, sellers can make a profit on resale, and buyers can still afford to get into the market. This type of price growth can usually be explained by economic factors, such as an employment boom and favourable interest rates.

On the other hand, a housing bubble can happen as a result of non-organic growth. For example, if speculators were flooding the market, buying up homes to take advantage of rapid price growth, with the intention of selling in the near term for a hefty profit. When prices are deemed to have hit a high point, speculators list their properties for sale. This massive influx of listings, coupled with stagnating demand, causes prices to plummet and results in a “housing market crash.”

A housing bubble is a temporary event and prices eventually return to normal levels, when demand rises again and home-buying activity resumes.

What Happens When a Housing Bubble Bursts?

During a housing bubble, homes become overvalued. When the bubble bursts, prices fall. Homeowners who have no intention of selling are unlikely to feel the direct impacts of the bursting bubble. However, these market conditions often indirectly impact other aspects of the economy, so to call homeowners who aren’t selling “free and clear” would be misleading. The ripple effects of a bursting housing bubble would likely touch most of us, in one way or another.

Homebuyers who purchased a home during a housing bubble likely paid considerably more than it is worth. Properties bought by end-users as a residence, with no intention of being sold in the short-term, will eventually rebound closer to “normal” values and at some point, return to positive growth.

A housing bubble poses the biggest risk to home sellers. Those who purchased in the bubble, but now find themselves forced to sell their home, will come up short on resale. They bought the home at a price that exceeds what they can recoup, putting them in the red with no asset to show for it.

For example, someone purchased at peak market prices, but due to circumstances such as a job loss or the inability to carry the costs for any reason, now has no choice but to sell in a down market. The seller still owes money to their mortgage lender on a home that they no longer own.

Are We in a Housing Bubble?

The Canadian housing market took a surprising upward turn during the COVID-19 pandemic, after coming to a grinding halt in mid-March. The slow-down was short-lived, and what followed through the remainder of 2020 was a a spike in demand for homes met by a shortage of supply. With 2021 well underway, there appears to be no end in sight.

There are a number of factors that indicate we’re not experiencing a bubble caused my market speculators, contrary to some media reports.

A recent online survey of RE/MAX brokers and agents in Western Canada, Ontario and Atlantic Canada found that speculators are not a factor in the Canadian real estate market at this time. In fact, more than 96% of RE/MAX brokers and agents supported this finding, confirming that the majority of homebuyers are end-users. Speculators tend to wait out hot markets, buying when prices are down and selling when they’re up again. The short-term investment opportunities they’re generally looking for are hard to find under current market conditions. Bully offers and bidding wars are commonplace, and we continue to see demand outpacing supply with the release of the monthly housing market data. These factors are generally inhospitable to speculators and investors.

For a housing bubble to burst, there needs to be a steep incline in inventory and new listings, and a decline in demand – neither of which is likely to happen any time soon.

Housing Crash 2021? It’s Highly Unlikely.

The Canadian housing market is still feeling the impacts of the pent-up demand from 2017, when the government introduced the foreign buyer tax and the mortgage stress test as a means to cool the overheating market. These policies prompted many homebuyers to move to the sidelines, opting to wait and save, with plans to re-engage in the housing market in a few years.

Now fast-forward a few years to 2020. COVID-19 had a similar impact on the market, whereby many homebuyers delayed their purchase plans due to pandemic-related uncertainties. That pre-existing pent-up demand for homes continued to swell. With Canadians subject to stay-at-home orders with nowhere to go and spend their hard-earned money, they collectively saved historically high sums, which was injected back into the housing market once consumer confidence returned. The spending came in the form of record-high home sales and for those who were unwilling to face the competitive resale market conditions, renovations to existing dwellings. In fact, Canadian real estate was said to be the driving force behind the Canadian economy in 2020.

Savings, low interest rates and low inventory continue to put pressure on the housing market.

Now, consider the housing needs of the 1.2 million people who are expected to immigrate to Canada through 2023, per the government’s 2021-2023 Immigration Levels Plan.

Given all this, it’s highly unlikely that we’ll experience the influx of real estate listings needed for a housing market crash – and if we did see those listings suddenly come on stream, there should be plenty of buyers to absorb them.

Homebuyers and Sellers, Do Your Due Diligence

Challenging market conditions and a still-present global pandemic have added some personal risk on the part of homebuyers and sellers. It’s important to remember that conditions vary across Canada, and can be dramatically different between provinces, cities, and even from one neighbourhood to the next. Now more than ever, it’s important to work with a trusted, experienced professional Realtor who can guide you though the buying and selling process.

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